Investment in Value or Growth and Risk Diversification in the Capital Market

Long term investment can be done by using methods of fundamental analysis. Fundamental analysis is a group of methods which concern on the profitability of securities through a prism of estimation fundamental and economic condition in company, its stability on the market and development outlook. The main issue in such kind of analysis is description of security internal value and comparison with market price. Investment will be profitable when internal value is higher then market price. In classical point of viou fundamental analysis require to leading analysis in four steps:

• macroeconomic analysis
• sector analysis
• evaluation of economic and financial condition (with classical indicator analysis and market ratios)
• valuation of the company worth and establish its internal value.

In long term investment is possibility to use certain strategies of investment: investment in value or in growth. Such kind of strategies are constructed by using of some (proper) information which came from fundamental analysis.

The strategy of value investment concern to investment in undervalued securities. The strategy of growth investment concern to investment in companies which have big potential and dynamic of growth.

In both strategies a very important issue is: economic and financial condition of the company. It means, that company should have good fundamental base – good fundamental power.

The both approaches in investment should guarantee for investors over and above increase of rate of return (but it works in long term because it is a long process) and reduce risk of investment

But these strategies are different because they put emphasis on particular factors (information) which are proper and compatible with guidelines in given strategy.